The Public Private Education Facilities and Infrastructure Act of 2002
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The Public Private Education Facilities and Infrastructure Act of 2002 2003 VIRGINIA ENGINEERS CONFERENCE Chris Lloyd McGuireWoods Consulting October 10, 2003. PPTA Success Stories. VMS - Contract for maintenance of 25% of Virginia’s interstate lane miles

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The Public Private Education Facilities and Infrastructure Act of 2002

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The public private education facilities and infrastructure act of 2002

The Public Private Education Facilities and Infrastructure Act of 2002

2003 VIRGINIA ENGINEERS CONFERENCE

Chris Lloyd

McGuireWoods Consulting

October 10, 2003


The public private education facilities and infrastructure act of 2002

PPTA Success Stories

  • VMS - Contract for maintenance of 25% of Virginia’s interstate lane miles

  • Interstate 895 - $325 million, connecting suburbs to Richmond International Airport

  • Route 288 - $236 million, 17.5 mile beltway around Richmond, support Capital One expansion

  • Route 28 - new interchanges on access road serving Dulles International Airport

  • Coalfields Expressway - new road for SW Virginia, leverages dedicated federal funds


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002

What are the components of a successful proposal?

  • Delivers something in demand

  • Private sector shares in the risk

  • Minimizes impact on state/local debt model

  • Faster, better, and cheaper

  • Deliver something unique

  • Broad political support

  • Open and inclusive process that keeps the public informed

  • Strong partnership between staff and elected body


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002

What is it?

- An alternative procurement tool that allows public entities to more efficiently develop infrastructure and achieve better value for the taxpayer

What it is NOT?

- A panacea that resolves all procurement issues

- A way to get something for nothing


Public private education facilities and infrastructure act of 2002 funding

Structures

Design-build

Design-build-O&M

Build-own-operate

Build-own-revert

Sale-leaseback

Lease-purchase

Long-term O&M contracts

Various development agreements

Funding/Value

Traditional government sources (GF/NGF)

User fees

Service contracts

Lease payments

Commercial revenues

Private activity bonds

Depreciation and other tax credits for private entities

Leverage funding streams

Public-Private Education Facilities and Infrastructure Act of 2002 - funding


Public private education facilities and infrastructure act of 2002 funding1

Typical deal structure

Team offers “turn-key” project delivery

Contractor willing to assume project delivery risk

Life-cycle maintenance is included

Other revenue-generating activities are suggested

Team members provide free services that benefit government entity even if project does not proceed

Achieves cost savings through design-build and financing

Financing vehicles use solely local funds or 63(20) structure

Public-Private Education Facilities and Infrastructure Act of 2002 - funding


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

What is happening across Virginia?

  • Education facilities in Falls Church and Stafford County - agreements signed

  • Pending school proposals in Chesterfield, City of Fredericksburg, Manassas Park, and City of Winchester

  • Longwood University facilities

  • Public safety facilities in Roanoke and Frederick Counties (others in the works)

  • Capitol Square redevelopment

  • Prison construction program

  • Science Museum of Virginia at Belmont Bay


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Anticipated growth areas

  • Water and wastewater

  • Public safety

  • Colleges and universities with small/unsophisticated endowments

  • Courthouses and other local government buildings

  • Local/regional jails

  • Technology procurement

  • Performance contracting/energy conservation


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Who are the major players?

  • Northrop Grumman Mission Systems

  • Haskell Company

  • Centex Construction

  • Clark Construction

  • English Construction

  • Moseley Architects

  • Morgan Keegan

  • Lehman Brothers

  • J.P. Morgan Chase

  • GE Capital

  • Lincoln Properties

  • Fluor


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Trends - How Are Local Governments Reacting?

  • Implementation of PPEA guidelines becoming more widespread

  • “Smart” firms are actively looking for good projects

  • “Smart” local governments are seeking maximum leverage

  • Deals are closing very quickly

  • Public input is lacking

  • Creative financing has not been embraced

  • Board vs. staff debates


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

Potential pitfalls

  • Too much work goes to out-of-state companies or large conglomerates

  • Cost savings are hard to define

  • Process seems rushed, appearance of inside deals

  • Debt capacity is compromised

  • Voters feel left out of the process

  • Non-performance by a contractor (picked the wrong team)

  • Board vs. staff debates cause long term problems


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

How can engineers get more involved?

  • Assess your capabilities – where have you done projects that have made you a trusted resource

  • Talk to contractors – they have the lead

  • Survey government contacts for potential projects

  • Be willing to put in some sweat equity


The public private education facilities and infrastructure act of 2002

Public-Private Education Facilities and Infrastructure Act of 2002 - implementation

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